{"id":48158,"date":"2023-08-14T09:43:18","date_gmt":"2023-08-14T13:43:18","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/whats-next-for-nikes-stock\/"},"modified":"2023-08-14T09:43:20","modified_gmt":"2023-08-14T13:43:20","slug":"whats-next-for-nikes-stock","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=48158","title":{"rendered":"What\u2019s Next For Nike\u2019s Stock?"},"content":{"rendered":"
\n

Note: Nike\u2019s
\n
\n NKE
\n <\/fbs-ticker> FY\u201923 ended on May 31, 2023. <\/em><\/p>\n

After almost a 7% decline year-t0-date, at the current price of around $109 per share, we believe Nike stock <\/strong>(NYSE: NKE), a company designing, developing, and marketing footwear, apparel, equipment, and accessory products – could see gains in the longer term. NKE stock has declined from around $117 to $109 YTD, underperforming the broader indices, with the S&P growing about 16% over the same period. The company\u2019s gross margin came down 240 basis points to 43.5% in FY 2023, due to promotional activities and higher cost of goods sold overall, as well as the negative impact of exchange rates. Consequently, Nike\u2019s profits suffered due to heavy promotional activity and slower market growth. While the company\u2019s profitability will likely be pressured in the short term due to advertising activity, the long-term outlook for the company looks quite stable. Nike has managed to make progress in reducing inventory surplus in Q4. Its inventories were unchanged from the same period a year earlier but were down 13% from their peak in Q1 2023. A number of sporting events, including the women\u2019s soccer world cup and the Kobe brand\u2019s relaunch, are also expected to drive sales. There is also potential for the Jordan brand to grow in the international markets. Also, the company\u2019s ability to leverage China\u2019s recovery is a big positive for the company. As such, Nike\u2019s sales in China grew by double-digits for the company during the June 18th shopping festival, the country\u2019s annual shopping festival.<\/p>\n

Nike reported Q4 revenue of $12.83 billion, up 5% year-over-year (y-o-y). In the fiscal fourth quarter, Nike Direct sales were up 15% to $5.5 billion on a reported basis. A rise in revenue in Greater China (16%) outpaced the revenue growth recorded in the Asia Pacific & Latin America (+5%), North America (+5%), and Europe, Middle East, & Africa (+3%). Footwear revenue rose 7% to $8.55B, while apparel revenue was flat compared to a year ago at $3.23B. However, the company\u2019s GAAP earnings came in at $0.66 per share and were down 27% y-o-y.<\/p>\n

We forecast Nike\u2019s Revenues to be $54.3 billion for the fiscal year 2024, up 6% y-o-y. We forecast earnings per share to come in at $3.73. Given the changes to our revenues and EPS forecast, we have revised our Nike\u2019s Valuation<\/strong> to $123 per share, based on a $3.73 expected EPS and a 33.1x P\/E multiple for the fiscal year 2024 – almost 12% higher than the current market price. That said, the company\u2019s stock appears cheap at the current market price.<\/p>\n

<\/fbs-ad><\/p>\n

In FY 2024, management expects sales to grow by mid-single-digits and gross margin to increase by 140-160 basis points and operating margin by 200 points due to better freight rates, a slight decrease in advertising activity, and continued acceleration in Direct sales. It should be noted that its selling, general, and administrative costs are expected to outpace revenue growth due to increased marketing spending.<\/p>\n

Notably, NKE stock had a Sharpe Ratio of 0.5 since early 2017, which is slightly lower than the figure of 0.6 for the S&P 500 Index over the same period. Compare this with the Sharpe of 1.2<\/strong> for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.<\/p>\n

It is helpful to see how its peers stack up. Check out how Nike\u2019s Peers<\/strong> fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.<\/p>\n

Invest with Trefis <\/strong>Market Beating Portfolios<\/strong><\/p>\n

See all Trefis <\/strong>Price Estimates<\/strong><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Note: Nike\u2019s NKE FY\u201923 ended on May 31, 2023. After almost a 7% decline year-t0-date, at the current price of around $109 per share, we believe Nike stock (NYSE: NKE), a company designing, developing, and marketing footwear, apparel, equipment, and accessory products – could see gains in the longer term. NKE stock has declined from […]<\/p>\n","protected":false},"author":1,"featured_media":48159,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-48158","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\nWhat\u2019s Next For Nike\u2019s Stock? | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Note: Nike\u2019s NKE FY\u201923 ended on May 31, 2023. 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